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TEGNA's (TGNA) Q3 Earnings Miss Estimates, Revenues Rise Y/Y

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TEGNA’s (TGNA - Free Report) third-quarter 2020 non-GAAP earnings of 59 cents per share missed the Zacks Consensus Estimate by 1.7%. However, the bottom line surged 118.5% on a year-over-year basis.

Revenues jumped 33.8% year over year to $738.4 million and matched the consensus mark. This year-over-year growth was driven by record political advertising revenues, solid contributions from acquisitions, continued spike in subscription revenues and resurgence in advertising revenues.

Excluding political advertising revenues, adjusted revenues increased 14% year over year.

Quarter in Detail

Advertising and Marketing services (40.4% of revenues) revenues climbed 0.4% year over year to $298.6 million. Excluding political advertising revenues, Premion witnessed double-digit revenue growth in the reported quarter.

Subscription (42.9% of revenues) revenues surged 31.5% year over year to $316.7 million. The top line benefited from new station acquisitions and higher rate.

TEGNA Inc. Price, Consensus and EPS Surprise

 

TEGNA Inc. Price, Consensus and EPS Surprise

TEGNA Inc. price-consensus-eps-surprise-chart | TEGNA Inc. Quote

Political (15.8% of revenues) revenues were $116.5 million compared with $8.1 million in the year-ago quarter.

Markedly, within a short span of time, VERIFY’s election and fact-checking content on Snap’s (SNAP - Free Report) Discover platform grew to 141,000 subscribers and 6.3 million unique viewers. More than 50% of VERIFY’s audience is under the age of 25, reflecting TEGNA’s expanding reach among young consumers.

Moreover, VERIFY’s monthly average visitors are up 234% and video plays are up more than 700% year over year.

Other revenues (0.9% of revenues) were $6.6 million, up 16.9% year over year.

Non-GAAP adjusted EBITDA soared 64.8% year over year to $259 million. Adjusted EBITDA margin expanded to 35.1% compared with 28.5% in the year-ago quarter.

Non-GAAP operating expenses (69.4% of revenues) of $512.6 million were up 20.6% year over year, primarily on account of buyouts and higher programming expenses in relation to a spurt in subscription revenues.

Non-GAAP operating income jumped 78.2% year over year to $225.8 million. Operating margin expanded to 30.6% from 23% reported in the year-ago quarter.

Balance Sheet & Cash Flow

As of Sep 30, 2020, total cash was $165 million compared with $173 million as of Jun 30, 2020. The company had more than $1.3 billion in undrawn capacity under its revolving-credit facility. As of Oct 31, 2020, the undrawn capacity under the facility was $950 million.

Total debt was $3.9 billion and net leverage was 4.50 times as of Sep 30, 2020, compared with $4.1 billion debt and net leverage of 4.76 times as of Jun 30, 2020.

Free cash flow in the third quarter was $153.1 million, up 46.3% year over year.

Key Q4 Developments

TEGNA recently completed an update of Roku (ROKU - Free Report) streaming apps for all its stations. The company has also begun to roll out station apps on Amazon’s (AMZN - Free Report) Fire TV.

Outlook

TEGNA now expects 2020 subscription revenues to be up in the high-twenties percentage. Moreover, this Zacks Rank #1 (Strong Buy) company now expects net leverage to be 4.20x or lower by the end of 2020. You can see the complete list of today’s Zacks #1 Rank stocks here.

Moreover, TEGNA has no other upcoming debt maturities until 2024 as it was successful in extending maturities through a $550 million private placement offering in September.

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